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The Indian gem & jewellery industry, which was upbeat after the announcement of the proposed U.S.-India Trade Agreement in February, is expecting a major impact on trade on account of the escalating geopolitical tensions in West Asia. While the U.S.-Israel air strikes were initially directed at Iran, killing its long-standing Supreme Leader Ayatollah Ali Khamenei along with the country’s top brass, Iran’s military response extended the war to whole of the oil-rich Gulf Cooperation Council (GCC) region creating acute instability and uncertainty.
Apex trade body the Gem & Jewellery Export Promotion Council (GJEPC) has expressed deep concern over the escalating tensions over the last week as it will be a dual shock to India’s s gem & jewellery supply chain.
India is heavily dependent on the UAE for both exports and raw materials. India’s Cut and Polished Diamond (CPD) and gold jewellery exports flow to UAE which supplies rough diamonds and bullion to the Indian market.
According to trade body the war is leading to upstream supply disruptions and posing threats to raw material inflows. This is due to closure of flights and ports in Israel, Qatar, Kuwait and UAE. So, it has led to demand and supply shocks.
The downstream market disruptions have started impacting demand in UAE, a key centre. Rerouting via Red Sea is rising freight and insurance costs. In a situation of supply constraints and demand volatility the gem and jewellery industry is facing supply chain risk, the body emphasized.
The GCC markets remained important for India’s gem & jewellery sector due to cultural preferences and high consumer demand.
As per available data, GCC’s share of India’s total exports doubled from 14% in FY22 to around 22% in FY25l rising to 36% during April-December 2025.
India’s gem & jewellery exports to GCC surged from $5.1 billion in FY22 to $8.3 billion in FY25, showing strong growth.
According to GJEPC data UAE and Saudi Arabia are leading importers driving the majority of gem & jewellery trade in the GCC region. The growth was driven by demand, trade policies, cultural affinity, improved logistics and targeted marketing.
The GCC has emerged as a key sourcing hub and its share has surged to 32% over the last four years. India’s gem & jewellery imports from GCC had surged from $16 billion in FY22 to $28 billion in FY25.
GCC countries supply over 30% of India’s gem & jewellery imports providing raw materials and precious metals. In all these UAE acts as a key hub for gold and diamond imports and had ensured efficient supply chains for the Indian jewellery industry.
Also the GCC has emerged as a key growth market for India’s CPD exports and its share has tripled to 26% (in April- December 2025) from 8.7% in FY22.
According to a report by Crisil West Asia is a major trading hub with Israel and UAE together accounting for 18% of total diamond exports in the first 9 months of this fiscal. Additionally 68% of all Indian rough diamond imports are from UAE and Israel due to the auctions held in the region.
India’s exports of CPD to GCC countries reached $19 billion in FY25 and GCC’s share in India’s CPD exports rose to 15% boosted by rising consumer demand and favourable trade policies, as per GJEPC. Dubai serves as a key diamond trading hub with bilateral agreements enhancing trade flows. Now that Dubai has come under attack, uncertainties have caused concern and business disruptions.
GCC has also emerged as a dominant market for India’s gold jewellery exports. This region accounts for over 50% of India’s gold jewellery exports. According to GJEPC data gold bar imports from GCC countries surged to 209 tons valued at over $17.5 billion in FY25.
GCC countries contribute over 27% of India’s gold bar imports and this highlights the region’s supply chain importance.
“The situation is a matter of serious concern, and we hope for stability and peace to return at the earliest to make it conducive of conducting regular business activities. Being a key hub for gold bar imports, UAE supports India’s jewellery manufacturing and retail sectors,” the trade body said.
“From an industry standpoint, the GCC countries and MENA region is not only an important export destination for India’s gem and jewellery sector, but also a key hub where Indian companies have established business interests,” GJEPC said.
“These include significant investments in jewellery retail chains, regional offices, manufacturing units, and logistics networks among other trade verticals. GJEPC’s India Jewellery Exposition Centre (IJEX) in Dubai and the Saudi Arabia Jewellery Exposition (SAJEX) initiatives are examples of long-term investments across the Middle East,” it said.
Stating that the Gulf region is also home to a large Indian diaspora, many of whom are directly associated with the gem and jewellery trade, the body said given these deep connections, any prolonged instability can have implications for business sentiment, movement of goods, imports of raw materials , exports of finished goods and overall market dynamics.
“At present, the industry is closely monitoring developments and adopting a cautious wait-and-watch approach while continuing normal business operations wherever feasible. GJEPC remains in touch with stakeholders from Industry and Government of India. We will assess the evolving situation to evaluate any potential impact on India’s gem and jewellery exports and would urge the Government to take steps accordingly,” it added.
